SA hit by ‘worst electronic component shortages in 30 years’

Global supply chain constraints have rocked the South African tech distribution channel, with some distributors labelling the predicament as the “worst challenge the industry has experienced in three decades”.

The increasing global demand for a range of computing products, including the power chips that manage power consumption in mobile phones, semiconductors which are the essential building blocks used to make computers and gaming consoles, coupled with a perfect storm of disruptions within manufacturing and transportation logistics, have led to much frustration in the local distribution channel.

In some areas, the decrease in ICT supply has been caused by manufacturers re-directing their manufacturing processes to focus on mass-production of personal protective equipment, as demand from governments across the globe soars.

The world’s largest electronics manufacturer, Taiwanese multinational Foxconn, confirmed last month that component shortages are expected to linger until mid-2022, resulting in skyrocketing prices, as a knock-on effect takes its toll.

Mustek, one of SA’s largest distributors of personal computers and complementary ICT products, says the shortages have caused a ripple effect across all industry verticals, resulting in a shortage of laptops, tablets, printing and scanning equipment, and peripherals, among other products.

“In my 34 years of working within the IT industry, I have never experienced or seen such shortages,” says David Kan, CEO of Mustek.

“As a result of the shortages, pricing has gone through the roof. For example, within the semiconductor products (such as display controller) prices have increased by more than 30 times. In this environment, even if you are willing to pay the prices given, there is no guarantee of supply. Worst of all, the shortages are not on a specific product, but range across all products.”

Kan points out that estimated time of product arrival has been unclear and the goal posts keep changing, resulting in suppliers having to proactively forecast with Mustek, and customers experiencing extreme frustration.

“Price is no longer the determining factor − product availability is. Customers are having to procure product that is fit for purpose and taking what they can get, not what they ideally want. Fulfilment is an absolute priority, and a lot of up-selling and down-selling is being experienced,” adds Kan.

The local smartphone industry has also been affected, with telcos confirming to ITWeb last month that local iStores were battling to secure sufficient iPhone stock, as higher demand and supply chain constraints caused by the pandemic have resulted in a shortage of some iPhone 12 models.

David Kan, CEO of Mustek.
David Kan, CEO of Mustek.

Matthew Hall, product director at Rectron South Africa, notes the software and hardware ICT distributor is witnessing huge shortages of CPUs, GPUs and processors – the further down the distribution channel, the more products are being affected.

“The current shortage of electronic hardware we are experiencing is leaving distributors and other businesses in an uncomfortable position. Many retailers are forced to sell products well above the manufacturer’s suggested retail price to break even.

“Forecasting and receiving regular supply from the global suppliers is not on the cards anymore, with various aspects in the supply chain being affected; from physical goods constraints to the necessary components needed in the manufacturing process, to shipping companies around the world. All these factors come at a good cost.”

In terms of the impact on the business arena, Hall points out larger enterprises have felt the biggest pinch in the larger-scale opportunities, with their regular IT rollout plans being pushed out to a later stage.

“Rectron’s strong relationships with vendors/suppliers have enabled us to offer alternatives. We have been working very closely with all our suppliers and manufacturers to be able to lean on them in these times. Our big focus is that we can offer a solution to our resellers, who in turn can offer the consumer a solution,” notes Hall.

Homemation, local distributor of residential automation tech solutions and audio-visual electronics equipment, says its most hard-hit category is that of audio-visual receivers and smart lighting products.

“This challenge has been exacerbated by an increased demand for products, as many South Africans are looking to invest in their homes and the technology within, and again the pressure has been added as many of the other distributors put the brakes on their orders and forecasting of new orders as there was uncertainty of future business in SA,” comments Warren Husband, solutions architect and client liaison at Homemation.

For the most part, Homemation is in a niche market with a robust business model that includes a consistent stream of products; this means categories that are out of stock will either have an alternative available, or a new shipment due to arrive within a few weeks, notes Husband.

Tarsus Distribution’s spokesperson was not available to respond to ITWeb’s questions.

SOURCE:

 

https://www.itweb.co.za/content/DZQ58vVP91oMzXy2

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